Vladimir Putin delivered the Annual Presidential Address to the Federal Assembly. The Address was traditionally delivered at the Kremlin’s St George Hall before an audience of more than 1,000 people.

Those present for the Address included members of the Federation Council, State Duma deputies, members of the Government, heads of the Constitutional and Supreme Courts, regional governors, heads of regional legislative assemblies, heads of Russia’s traditional religious faiths, public figures, including heads of regional civis chambers, and the heads of Russia’s biggest media outlets.

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President of Russia Vladimir Putin: Citizens of Russia, members of the Federation Council, State Duma deputies,

I would like to begin my Address with words of gratitude to the Russian servicemen who are fighting international terrorism.

Today here in the St George’s Hall, a historic hall of Russian military glory, we have combat pilots and representatives of the Armed Forces who are taking part in the anti-terrorist operation in Syria.

Gelena Peshkova and Irina Pozynich, who lost their husbands in the war against terror, have joined us too. My deepest respect to you and the parents of our heroes.

I would like us all to honour the memory of the soldiers who gave their lives while doing their duty, and the memory of all Russian citizens who fell at the hands of terrorists.

(Moment of silence)

Colleagues,

Russia has long been at the forefront of the fight against terrorism. This is a fight for freedom, truth and justice, for the lives of people and the future of the entire civilisation.

We know what aggression of international terrorism is. Russia faced it back in the mid-1990s, when our country, our civilian population suffered from cruel attacks. We will never forget the hostage crises in Budennovsk, Beslan and Moscow, the merciless explosions in residential buildings, the Nevsky Express train derailment, the blasts in the Moscow metro and Domodedovo Airport.

These tragedies took thousands of lives. We still grieve for them and will always grieve, along with the victims’ loved ones.

It took us nearly a decade to finally break the backbone of those militants. We almost succeeded in expelling terrorists from Russia, but are still fighting the remaining terrorist underground. This evil is still out there. Two years ago, two attacks were committed in Volgograd. A civilian Russian plane was recently blown up over Sinai.

International terrorism will never be defeated by just one country, especially in a situation when the borders are practically open, and the world is going through another resettlement of peoples, while terrorists are getting regular financial support.

Terrorism is a growing threat today. The Afghanistan problem has not been resolved. The situation there is alarming and gives us no optimism, while some of the yet recently stable and rather well-doing countries in the Middle East and North Africa – Iraq, Libya and Syria – have now plunged into chaos and anarchy that pose a threat to the whole world.

We all know why that happened. We know who decided to oust the unwanted regimes and brutally impose their own rules. Where has this led them? They stirred up trouble, destroyed the countries’ statehood, set people against each other, and then “washed their hands”, as we say in Russia, thus opening the way to radical activists, extremists and terrorists.

The militants in Syria pose a particularly high threat for Russia. Many of them are citizens of Russia and the CIS countries. They get money and weapons and build up their strength. If they get sufficiently strong to win there, they will return to their home countries to sow fear and hatred, to blow up, kill and torture people. We must fight and eliminate them there, away from home.

This is why it has been decided to launch a military operation there based on an official request from the legitimate Syrian authorities. Our military personnel are fighting in Syria for Russia, for the security of Russian citizens.

The Russian Army and Navy have convincingly demonstrated their combat readiness and their increased capabilities. Modern Russian weapons have proved to be effective, and the invaluable practice of using them in combat conditions is being analysed and will be used to further improve our weapons and military equipment. We are grateful to our engineers, workers and all other personnel of our defence companies.

Russia has demonstrated immense responsibility and leadership in the fight against terrorism. Russian people have supported these resolute actions. The firm stance taken by our people stems from a thorough understanding of the absolute danger of terrorism, from patriotism, high moral qualities and their firm belief that we must defend our national interests, history, traditions and values.

The international community should have learned from the past lessons. The historical parallels in this case are undeniable.

Unwillingness to join forces against Nazism in the 20th century cost us millions of lives in the bloodiest world war in human history.

Today we have again come face to face with a destructive and barbarous ideology, and we must not allow these modern-day dark forces to attain their goals.

We must stop our debates and forget our differences to build a common anti-terrorist front that will act in line with international law and under the UN aegis.

Every civilised country must contribute to the fight against terrorism, reaffirming their solidarity, not in word but in deed.

This means that the terrorists must not be given refuge anywhere. There must be no double standards. No contacts with terrorist organisations. No attempts to use them for self-seeking goals. No criminal business with terrorists.

We know who are stuffing pockets in Turkey and letting terrorists prosper from the sale of oil they stole in Syria. The terrorists are using these receipts to recruit mercenaries, buy weapons and plan inhuman terrorist attacks against Russian citizens and against people in France, Lebanon, Mali and other states. We remember that the militants who operated in the North Caucasus in the 1990s and 2000s found refuge and received moral and material assistance in Turkey. We still find them there.

Meanwhile, the Turkish people are kind, hardworking and talented. We have many good and reliable friends in Turkey. Allow me to emphasise that they should know that we do not equate them with the certain part of the current ruling establishment that is directly responsible for the deaths of our servicemen in Syria.

We will never forget their collusion with terrorists. We have always deemed betrayal the worst and most shameful thing to do, and that will never change. I would like them to remember this – those in Turkey who shot our pilots in the back, those hypocrites who tried to justify their actions and cover up for terrorists.

I don’t even understand why they did it. Any issues they might have had, any problems, any disagreements even those we knew nothing about could have been settled in a different way. Plus, we were ready to cooperate with Turkey on all the most sensitive issues it had; we were willing to go further, where its allies refused to go. Allah only knows, I suppose, why they did it. And probably, Allah has decided to punish the ruling clique in Turkey by taking their mind and reason.

But, if they expected a nervous or hysterical reaction from us, if they wanted to see us become a danger to ourselves as much as to the world, they won’t get it. They won’t get any response meant for show or even for immediate political gain. They won’t get it.

Our actions will always be guided primarily by responsibility – to ourselves, to our country, to our people. We are not going to rattle the sabre. But, if someone thinks they can commit a heinous war crime, kill our people and get away with it, suffering nothing but a ban on tomato imports, or a few restrictions in construction or other industries, they’re delusional. We’ll remind them of what they did, more than once. They’ll regret it. We know what to do.

We have mobilised our Armed Forces, security services and law enforcement agencies to repel the terrorist threat. Everyone must be aware of their responsibility, including the authorities, political parties, civil society organisations and the media.

Russia’s strength lies in the free development of all its peoples, its diversity, the harmony of cultures, languages and traditions, mutual respect for and dialogue between all faiths, including Christians, Muslims, Judaists and Buddhists.

We must firmly resist any manifestation of extremism and xenophobia while defending our ethnic and religious accord, which is the historical foundation of our society and the Russian statehood.

In 2016 we will hold elections to the State Duma. I would like to remind party leaders, all participants of the upcoming election campaign and all the social and political forces about the following words of our famous historian, Nikolai Karamzin: “Those who have no respect for themselves cannot hope to be respected by others. That does not mean that love for our homeland must blind us into saying that we are better than all others in everything we do. But Russians must know their value.”

Yes, we can debate ways to solve this or that issue. But we must remain united and remember what is most important for us: Russia.

The election campaign must be honest and transparent and respect the law and the electorate. At the same time, it must be conducted so as to win public trust in the election results and legitimacy.

Colleagues, I expect that a considerable part of the parliamentary candidates’ election programmes will be devoted to the issue of corruption, which is a major concern for society. Corruption is hindering Russia’s development.

Officials, judges, law enforcement officers and deputies at all levels are obliged to submit their income and expense declarations and declare their property and assets, including outside Russia.

From now on, state and municipal officials will also have to disclose information about the contracts they plan to sign with the companies of their relatives and friends. Situations with a possible conflict of interest will be closely monitored by the regulatory and law enforcement authorities, as well as civil society.

Just recently participants in the Russian Popular Front’s project For Fair Public Procurement told me about the instances of abuse and blatant violations they have uncovered. I ask the Prosecutor General’s Office and the law enforcement authorities to promptly react to this information.

The law must be hard on those who are guilty of premeditated crimes against human lives and the interests of society and the state. But the law must be lenient to those who have slipped up.

Today, nearly half of the criminal cases brought to court concern petty crimes or misdemeanours, but those who committed them, including very young people, go to prison for them.

A prison term and even a prison record usually have a highly negative impact on these people’s lives, often creating a situation in which they commit new crimes.

I ask the State Duma to approve the Supreme Court’s proposal that some offences in the Criminal Code are decriminalised and that misdemeanour is reclassified as an administrative offence, with an important reservation: a repeated offence must be classified as a criminal act.

We must also work to enhance the independence and objectivity of our courts. In light of this, I suggest strengthening the role of juries and expanding the list of crimes that can be submitted to them. It’s not always easy to find 12 jurors, and although I know the position of human rights organisations, which insist on 12-member juries, forming such juries is not easy and it is also expensive. Therefore, I suggest cutting the number of jury members from 12 to 5–7, on the condition that they take their decisions autonomously and independently.

Colleagues, last year we faced some serious economic challenges. Oil and other products we traditionally offer for export fell in price. The access of Russian financial institutions and companies to global financial markets was restricted.

I know that many people are experiencing hardships today. These economic issues are affecting incomes and the general quality of life. I understand very well that people are wondering when we are going to overcome these hardships and what needs to be done in order to accomplish this.

The current situation is complicated but, as I have said before, not critical. In fact, we can already see some positive trends. Industrial production and the national currency are generally steady. There is a slight decline in inflation. We can see a significantly lower capital flight as compared to 2014.

However, this doesn’t mean that we just calm down and wait for everything to miraculously change, or that we can just sit quietly in expectation of rising oil prices. Essentially, such an approach would be unacceptable.

We must be prepared for low commodity prices and external restrictions to last much longer. By changing nothing, we will simply run out of reserves and the economic growth rates will linger around zero.

This is not the only issue to consider. Busy with the immediate tasks, we must not overlook general global development trends. The global economy is rapidly changing shape. New trade associations are forming. We are experiencing a period of radical change in the sphere of technology.

This is a crucial moment when countries need to compete to secure their roles in the global division of labour for decades ahead. We can and must become one of the leaders.

Russia has no right to be vulnerable. We must have a strong economy, excel in technology and advance our professional skills. We must fully use our current advantages, as there are no guarantees that we will have them tomorrow.

Clearly, the authorities must hear the public out and explain the nature of the problems people face and the reasons behind the government’s actions, treating civil society and business as equal partners.

What areas should we focus on?

First, competitive manufacturing is still concentrated mostly in the commodities and mining sector. We’ll only be able to achieve our ambitious goals in security and social development, to create modern jobs and improve the living standards of millions of our people if we change the structure of our economy.

Importantly, we do have effective industrial and agricultural operations, as well as small and medium-sized businesses. Our goal is to have the number of these kinds of companies grow fast in all sectors. Our programmes for import substitution and export support, manufacturing retrofitting and professional training should be geared to achieving this goal.

Second, we need to bear in mind that a number of industries are now at risk, including primarily the construction, automotive, and light industries, as well as railway engineering. To address this, the Government will need to come up with special support programmes. Financial resources for this purpose have been set aside.

Third. It is imperative to support low-income households and socially vulnerable groups of citizens, and finally adopt fair principles of providing social assistance that is made available to those who really need it. In particular, it is necessary to take into account the individual needs of people with disabilities, and focus on their training and employment.

We have done a lot to improve demography, education, and healthcare. The key benchmarks in these areas were outlined in the corresponding executive orders of May 2012. Of course, life is ever changing, and, given current complications, our responsibility for people’s welfare only increases, so I’d like to ask you to take these executive orders seriously. We must strive to fulfil them.

Fourth, it is imperative to achieve a balanced budget. This, of course, is not an end in itself, but a critical prerequisite for macroeconomic stability and our financial independence. As you may recall, by the end of the 2016 federal budget year, the deficit should not exceed 3 percent, even if revenue is lower than expected. Please take a note of this, colleagues, members of the State Duma and the Federation Council, the Federal Assembly in general. This is important. I just mentioned that financial stability and the independence of our country are completely interrelated. Please keep these basic considerations in mind.

Budget planning, in fact, planning each budget cycle must begin with a clear identification of priorities. We must make government programmes play the decisive role in this process again. It is essential that we tighten our control over public funds, including federal and regional subsidies to industrial and agricultural enterprises. I believe that they should be transferred to the end user only through treasury accounts. Government revenue must be used strictly as planned. ”Grey“ schemes used in paying customs duties, excise taxes on alcohol, tobacco, and fuels and lubricants siphon off hundreds of billions of rubles from the budget annually. This is outright theft.

I propose forming a single system for administering tax, customs and other fiscal payments. There are a variety of options to go about this, and we have discussed them on many occasions. I expect the Government to submit specific proposals. Here again, I would like to emphasise that the tax environment for business should remain unchanged in the coming years.

Fifth. We need to further strengthen trust between the Government and business, to improve the business climate in Russia.

This year we have mostly completed the plans outlined in the national entrepreneurial initiative. The dynamics are good, but we certainly shouldn’t stop yet.

The Government, together with the Agency for Strategic Initiatives and leading business associations, should continue their systematic work to improve the conditions for doing business, constantly monitoring how laws are carried out locally.

I believe free enterprise to be the most important aspect of economic and social well-being. Entrepreneurial freedom is something we need to expand to respond to all attempts to impose restrictions on us.

That is why we have given such a broad authority to the newly created Federal Corporation for the Development of Small and Medium Business. I would like to ask all ministries, departments, governors, heads of all Russian regions, state-owned companies and banks to provide all the necessary assistance to it.

Polls show that businesses see no qualitative progress in the regulators’ work. Yet, all the necessary instructions for this have been issued, even more than once. We repeat ourselves and our attempts to reduce their powers. We reduce them in one area – they simply grow again in another. A whole army of inspectors continues to hinder the operation of good businesses. I am not saying that control is not necessary. Business does require regulation. But I ask the Government Commission for Administrative Reform to work out, together with business associations, proposals on eliminating redundant and overlapping functions of regulatory agencies, and submit them by July 1, 2016.

I would like to cite some figures supplied by one of our business associations. During 2014, the investigative authorities opened nearly 200,000 cases on so-called economic crimes. But only 46,000 of 200,000 cases were actually taken to court, and 15,000 cases were thrown out during the hearings. Simple math suggests that only 15 percent of all cases ended with a conviction. At the same time, the vast majority, over 80 percent, or specifically, 83 percent of entrepreneurs who faced criminal charges fully or partially lost their business – they got harassed, intimidated, robbed and then released. This certainly isn’t what we need in terms of a business climate. This is actually the opposite, the direct destruction of the business climate. I ask the investigative authorities and the prosecutor’s office to pay special attention to this.

I would like to emphasise that prosecutors should make greater use of the tools available to check the quality of investigations. I know that discussions have been going on for a long time about the prosecutor office’s needs. As you know, we have separated the investigative authorities and the prosecutor's office in order to ensure independent investigations are carried out; it was a conscious decision. Today, I remind you, the prosecutor’s office has the authority to cancel a decision to institute criminal proceedings, or waive the indictment, or even refuse to support the case in court. We must learn to use what is available; only then we will be able to analyse what is happening in practice.

In addition, I believe that suspects in economic cases should be detained only as a last resort measure; for the most part investigators should opt for release on bail, travel restrictions or house arrest. The role of law enforcement and the judicial system is to protect the economy and community from fraud and criminals, and to protect the rights, property and dignity of all those who obey the law and conduct their business honestly.

There is one more point I’d like to make. Last year we announced the so-called capital amnesty to return financial assets to Russia. Yet, businesses seem in no hurry to take advantage of that opportunity, which suggests that the procedure proposed is too complicated, while guarantees it provides are still insufficient. I follow the public discussions on the issue. The word is, that what we have already done and the decisions we made previously are slightly better than the solutions we’ve offered in years past, but it is definitely not enough today. I ask the Government to organise consultations, including further consultations with the business community, with the Supreme Court, with law enforcement agencies, and in short order make the appropriate adjustments. I also suggest extending the capital amnesty itself for another six months.

Colleagues, the state will fund the necessary assistance to those who are ready to go forward and become leaders. We are building such a system in our dialogue with the business community based on its requirements and the tasks facing our country.

The Industry Development Fund is already supporting import substitution programmes. These programmes are needed by entrepreneurs. I suggest increasing its authorised capital by another 20 billion roubles.

We are also guaranteeing stable tax rates and other basic terms for investors who are ready to finance import substitution projects. This is included in mechanisms such as the special investment contract. I suggest granting the regions the right to reduce profit tax to zero under such contracts. Some governors directly request this to allow investors to cover their capital outlays on developing new production lines.

Obviously, we are aware of the regional governors’ concerns. The regions should be motivated to consolidate their economic base, so an increase in regional profits from implementing these projects should not lead to a reduction in federal subsidies.

We are ready to guarantee the demand for the goods produced under these programmes and projects. I propose giving the Government the right to purchase on a non-competitive basis up to 30 percent of the products manufactured under special investment contracts. Whatever remains should go to the free markets, including those abroad, to motivate these companies, to monitor the quality of their products and reduce overheads.

As you know, when other countries carried out these kinds of programmes, the terms for state support were even tougher: it was mandatory for a certain percentage of goods produced to be sold abroad. What for? To motivate producers to manufacture quality products.

We’re saying that we will guarantee demand in our own market. Our terms are somewhat different from those in other countries with tougher terms. That said, we must assume that these products will be highly competitive on the international market. Let me emphasise again that we will support expressly competitive domestic production lines. No one should be working under the illusion that under the guise of import substitution it’s possible to build a substandard, out of date product and pawn it off to the state or to our people and make them pay a premium price for it. Russia needs companies that are capable not only of providing the country with quality products but also of taking on foreign markets. The Russian Export Centre was established to help those who are ready for this effort.

In addition, I suggest making the growth of non-energy exports one of the key indicators of the performance of industry-related agencies and the Government as a whole.

I think it would be appropriate to implement the business community’s initiative and create a technological development agency to help companies acquire domestic and foreign patents and licenses for engineering services. Access to foreign markets and the expansion of Russian manufacturing should become a natural strategy for the development of the nation’s business sector and the entire Russian economy. We should put stereotypes aside and believe in our own capabilities. If we work with this attitude, we are certain to see a result.

Our agriculture sector is a positive example. Just a decade ago we imported almost half of our food products and critically depended on imports, whereas now Russia has joined the exporters’ club. Last year Russia’s agricultural exports totalled almost $20 billion. This is a quarter more than our proceeds from arms sales or about one third of our profits from gas exports. Our agriculture has made this leap in a short but productive period. Many thanks to our rural residents.

I believe we should set a national goal — fully provide the internal market with domestically produced foods by 2020. We are capable of feeding ourselves from our own land, and importantly, we have the water resources. Russia can become one of the world’s largest suppliers of healthy, ecologically clean quality foods that some Western companies have stopped producing long ago, all the more so since global demand for such products continues to grow.

To fulfil these ambitious goals, we need to concentrate our resources on primary support for highly efficient farms. This approach should underlie the programme for the development of the agro-industrial complex. This includes large, medium and small companies – all of them must be efficient. I would like the Agriculture Ministry to pay special attention to this.

It is necessary to put to use millions of hectares of arable land that is now idle. They belong to large land owners, many of whom show little interest in farming. How many years have we been talking about this? Yet things are not moving forward. I suggest withdrawing misused agricultural land from questionable owners and selling it at an auction to those who can and want to cultivate the land.

I would like to ask the Government to prepare specific proposals, including draft regulations and standards by June 1, 2016. I would also like to ask the State Duma deputies and all members of the Federal Assembly to make amendments to the related laws over the next year and adopt laws to make this possible at the next autumn session.

We also need our own technology for the production, storage and processing of agricultural produce, our own seed and pedigree stock. This is a very important goal. We are still vulnerable in these areas. I ask you to get leading research centres, the Russian Academy of Sciences and businesses which are successfully putting advanced technology into practice involved in this process.

In my previous Address, I announced the launch of the National Technology Initiative, spanning 15–20 years, but practical work is already underway. It shows that we have plenty of strong teams capable of offering and following through on innovative ideas. In areas such as neutron technology, robotics in aviation and the transport sector in general, energy storage and distribution systems, Russia has every chance of breaking through to global markets in the near future, within the next few years.

Development institutions should be geared towards achieving priority goals, primarily those related to technological modernisation. We have over two dozen of them. Unfortunately, many of them, to put it bluntly, have turned into dumping grounds for bad debts. It is essential to streamline them and optimise the structure and mechanisms of this work. I know that both the Government and the Central Bank are actively working on this.

We should make a more active use of the investment potential of domestic savings for economic modernisation. I ask the Central Bank and the Government to submit proposals on the development of the corporate bond market, something we have discussed many times. It is essential to simplify the procedure for the issue and acquisition of corporate bonds. To make it worthwhile for investors, individuals to invest in the development of the domestic real sector, I propose exempting the coupon income on these bonds from taxation, including from income tax for individuals.

Dozens of major projects are being implemented or are about to be launched in industry, agriculture, transport and housing construction. They should have a positive impact not only on separate sectors but also stimulate the comprehensive development of entire territories. These are primarily private projects.

To expedite their effective implementation it is important to make pinpoint amendments to laws, lift administrative barriers and assist the development of infrastructure and the process of entering foreign markets. These issues often extend beyond the scope of just one government agency, so I propose putting in place a mechanism to support the most important projects. A special agency can be established for this. I ask Prime Minister Dmitry Medvedev to submit proposals on the work of this agency.

Incidentally, one such project could be the creation of major private Russian companies that specialise in online trade so that Russian goods are delivered via the Internet to all countries in the world. We do have a great deal to deliver.

Colleagues, we are interested in broad business cooperation with our foreign partners, and we welcome investors who focus on long-term work on the Russian market, even though the current circumstances they face aren’t always favourable. We highly appreciate their positive attitude to our country, and the fact that they see advantages for growing their respective businesses in our country. Russia is involved in integration processes designed to open additional avenues for expanding economic ties with other countries.

We have reached the next level of cooperation within the Eurasian Economic Union by creating a common space, with free movement of capital, goods and labour. We have reached a basic agreement on combining Eurasian integration with the Chinese Silk Road Economic Belt. A free trade zone with Vietnam was established. Next year, we will host the Russia-ASEAN summit in Sochi, and I am sure we will be able to work out a mutually beneficial agenda for cooperation.

I propose holding consultations, in conjunction with our colleagues from the Eurasian Economic Union, with the SCO and ASEAN members, as well as with the states that are about to join the SCO, with the view of potentially forming an economic partnership. Together, our states make up nearly a third of the global economy in terms of purchasing power parity. Such a partnership could initially focus on protecting investments, streamlining procedures for the cross-border movement of goods, joint development of technical standards for next-generation technology products, and the mutual provision of access to markets for both services and capital. Of course, this partnership should be based on principles of equality and mutual interest.

For Russia, this partnership will open new possibilities for increasing exports of food and energy, as well as offering services in engineering, education, healthcare, and tourism to the Asia-Pacific Region, allowing us to play the leading role in forming new technology markets, and re-orienting major global trade flows to Russia.

We will continue to upgrade our transport infrastructure and expand major logistic centres, such as the Azov-Black Sea and the Murmansk transport hubs, modern ports in the Baltic Sea and the Russian Far East. We will consolidate the system of inter-regional air transport, including in northern and Arctic regions. We will review in detail the situation with inland waterways and river routes during a forthcoming State Council meeting.

The Northern Sea Route should become a link between Europe and the Asia-Pacific Region. To enhance its competitiveness, we will extend the preferential regime of the free port of Vladivostok to key Far Eastern harbours, as requested by the entrepreneurs who operate in this strategically important Russian region.

The socioeconomic development of this region is a major national priority. Investors have shown great practical interest in the new methods of operation we have proposed, including priority development areas.

I instruct the Government to expedite decisions on levelling off energy rates for the Far Eastern regions where they are considerably above average national rates, and I urge the Parliament to promptly hear the draft law on the free allocation of land plots to people in the Far East.

Over the past few years, major investments have been made in the development of Khabarovsk and Vladivostok, and people there have noticed the improvements. Komsomolsk-on-Amur must become one more rapidly developing centre in the Far East. It is a city with a rich history and modern high-tech industries, which turn out civilian products that enjoy high demand and also work fruitfully for the defence sector. But this city’s urban and social infrastructure has been neglected.

I’m referring to the city’s face and its sports, culture, healthcare and education facilities, none of which are consistent with the potential of Komsomolsk-on-Amur. This is why it is difficult to attract talented young professionals there, which the regional companies badly need. I believe that we can use resources under the on-going programmes to address the problems of Komsomolsk-on-Amur without delay. Of course, we can’t do this overnight, but we at least must understand what we need to accomplish and how fast work must proceed.

Colleagues, we have a long-term agenda that must be independent of election cycles and the prevailing situation. These strategic goals include preserving the nation, bringing up our children and helping them develop their talents, which constitutes the basis of the power and future of any country, including Russia.

I’d like to begin with demography. We’ve registered a natural increase in population for the past three years. It has been modest, but present nevertheless. What I would like to highlight is that, according to forecasts, we should have seen a demographic collapse due to the demographic echo of the 1990s, which demographers have predicted, including at the UN. But this hasn’t come to pass, primarily because half of the new-borns today are second or third children. Russian families want to have children, they believe in their future and in their country, and they are confident that the state will help them.

The maternity capital programme ends next year. Over 6.5 million families have enjoyed its benefits, including in Crimea and Sevastopol. But we know that our efforts in this sphere have not been sufficient to close the demographic wound of the past.

Of course, we realise that this will be hard on the budget, that the programme needs major funding. We said in the past that we need to analyse the figures to see if we can shoulder this burden, as the financiers say, if we can guarantee the payment of these allocations. Yes, we can do this, despite the current challenges. I believe that we must extend the maternity capital programme for at least two years.

A major demographic policy measure is the development of preschool education. Over the past three years, 800,000 new places have been created at kindergartens. Practically in all parts of Russia, such institutions are available for children between the ages of three and seven. I know that the Prime Minister has paid special, personal attention to this. Thank you, Mr Medvedev.

However, so far, individual families – many families – continue to encounter problems placing children in kindergartens. As long as these problems exist, we cannot say that the issue has been closed. I ask both the Government and regional authorities to pay special attention to this.

Now, healthcare. The main achievement of our entire policy in this sphere is that we are seeing an increase in average life expectancy. Over the past decade, it has increased by more than five years and this year, according to preliminary estimates, should exceed 71 years. Nevertheless, there are still quite a few problems that have to be dealt with.

Next year, the Russian healthcare system will transition completely to an insurance-based system. It is the direct responsibility of insurance companies operating in the compulsory medical insurance system to uphold patients’ rights, including in situations where they are refused free medical care without a reason. If an insurance company does not do this, it should be held accountable, including being banned from working in the compulsory medical insurance system. I ask the Government to ensure stringent oversight in this regard.

Next. We have significantly expanded the scope of high-tech medical care. It may be recalled that in 2005, 60,000 high-tech operations were performed in Russia – 60,000! – compared to 715,000 in 2014. For the first time in the country’s history, a significant part of such operations are carried out without there being a waiting list, and this is indeed a major achievement.

However, it is important to understand that certain operations are expensive. As a general rule, they are performed at leading federal medical centres and clinics. To finance such operations, I propose establishing within the compulsory medical insurance system… We have thought about this a great deal – whether we should provide additional funding to the system. The deputies, government ministers and governors know what happens in reality. The compulsory medical insurance system is a territorial system and it supports primarily territorial healthcare institutions. Naturally, underfinancing is a matter of concern for the heads of major federal clinics, where the majority of high-tech operations are in fact performed. So, to finance these centres and perform such operations, I propose instituting a special federal component within the compulsory medical insurance system. I request that the relevant amendments to the law be adopted during the spring session.

Even so, this is not enough because people must not suffer while we make these decisions. It is necessary to ensure continuous financing of high-tech medical care, including with direct support from the federal budget until this decision is made.

As you also know, the ambulance service has been significantly upgraded as part of the Healthcare national project. We have procured a large number of modern ambulance vehicles and other equipment. Naturally, as time goes on, the auto fleet needs maintenance and renovation. Ten years have passed. This is the regions’ responsibility and they are duty bound to fulfil this task and find the necessary reserves.

When we did this 10 years ago, I remember well, we agreed that we will make an initial injection of federal funding, and then the regions will take over the responsibility and keep the financing at a certain level. But this never happened, which is unfortunate. I understand that there may be issues, but like I said many times before, it is imperative to get our priorities straight. It was the wrong thing to do to wait for everything to fall apart, and then expect to be bailed out again with the money from the federal budget. However, the way things are now, it looks like we will have to do it again. But that's not what we agreed upon. In any case, I ask the Government and the regional authorities to get back to this issue and resolve it jointly.

People are complaining that they often cannot understand why certain hospitals, schools, cultural or social centres and institutions are being closed or merged. We keep talking about the need to restructure the network, which is, in some cases, oversized. Yes, that’s a fact. But we must proceed very carefully and be fully aware of the fact that in order for us to be able to reach certain indicators, closing rural medical centres is not always the best option. Unfortunately, such things happen. People then have to travel 100 kilometres to get medical attention. This is outrageous! Please make sure that things are done right. I ask the Government to draft and adopt a methodology for the most efficient distribution of social institutions by March 1, 2016. It should be mandatory for use in the regions. We must find a legally valid formula that will allow us to do so.

In matters such as providing assistance to the elderly or people with disabilities, or supporting families and children, it is imperative to show more trust in civil society and non-profit organisations. Often, they work more effectively and efficiently, showing genuine concern for the people. Also, there’s less red tape in their work.

I would like to propose a number of concrete solutions based on the results of the active citizens’ forum Community, which took place in November.

First, we will launch a special programme of presidential grants to support non-profit organisations working in small towns and villages.

Second, the non-profit organisations that have established themselves as reliable partners of the state will receive the legal status of a ”non-profit organisation – provider of socially useful services,“ and a number of incentives and preferences. Finally, I believe that making up to 10 percent of the regional and municipal social programmes’ funding available to non-profit organisations is the right thing to do. That way, non-profit organisations will be able to participate in providing social services that are financed from the budget. We believe we know well the current legislation, and we are not imposing anything on anyone, but I’d like to ask heads of the regions and municipalities to bear this in mind in their work.

Colleagues, as you may recall, there was a meeting with children in Sochi at the Sirius Centre for Gifted Children on September 1. Our children and young adults are really interesting and goal-oriented people. We must do our best to make sure that today's students get an excellent education, have opportunities to be creative, choose a profession to their liking, and are able to self-actualise regardless of their geographical location or level of their parents’ income. All children must have equal opportunities for a successful start in life.

Every year, schools have more and more students. There will be 3.5 million more of them over the next decade. It's great, it's very good, but it is also important to make sure that this increase does not affect the quality of education and learning conditions, and that the current level continues to improve. Schools need more space for students. I asked the Government to put together, in conjunction with the regions, a specific plan of action in this regard. A decision was made to release up to 50 billion rubles from the federal budget next year to repair, renovate and build new schools.

I suggest we take a broader look at these issues. Comfortable buildings are not enough to get a good education. We need professional and motivated teachers, ground-breaking educational programmes and, of course, opportunities for the children to engage in creative activities, sports and extracurricular activities. Of course, we should use the best of what former Palaces of Pioneers and young technicians' clubs had to offer. We must build our work on an innovative and up-to-date foundation with the participation of businesses, higher education institutions and universities.

I will now note a positive fact, such as the growing interest of young people in engineering jobs and blue-collar occupations, the vocations of the future. Competition for enrolment in engineering universities has almost doubled in the past two years. The WorldSkills International (WSI) will take place in Kazan in 2019. By the way, Russia was the first to hold such contests for young people aged 10 to 17 years. It is important to make sure that such tournaments become a road map for school children, for those who are just choosing their trades. We must establish a whole system of national competitions for blue-collar workers. I suggest we call this system “The Young Professionals.” This is a very important task.

In a nutshell, Russian schools, additional and professional education, and support for children’s creative work should be aligned with the country’s future, the requirements of people, young people in this case, and the demands of the economy in the context of its prospects. These guys will have to resolve even more complicated tasks and should be ready to be the best. They should become not only successful in their careers but also simply decent people with a firm moral and ethical background.

Colleagues, we have repeatedly faced a historical choice of which road to take to further development. We crossed another milestone in 2014 when Crimea and Sevastopol were reunified with Russia. Russia declared a voce piena its status as a strong state with a millennium-long history and great traditions, as a nation consolidated by common values and common goals.

We are acting with the same confidence now, at a time when Russia is waging an expressly open, direct struggle against international terrorism. We are making and implementing decisions, knowing that only we can cope with the tasks facing us, but only if we act together.

I will cite a quotation that seemed stunning even to me. These words were said by a man who was far removed from politics, Dmitry Mendeleyev, who expressed these thoughts more than a hundred years ago: “We will be immediately destroyed if we are divided. Our strength lies in our unity, our warriors, our benign domesticity that multiplies the numbers of our people; our strength lies in the natural growth of our intrinsic wealth and love of peace.” These are wonderful words that are pertinent to us today.

At the same time Russia is a part of a global world that is changing rapidly. We understand well the complexity and scale of existing problems – both foreign and domestic. There are always difficulties and obstacles on the path to progress and development. We will respond to all challenges; we will be creative and productive; we will work for the common good and for the sake of Russia. We will move forward in unity and working together we will achieve success.